Iraq to Auction Giant Nassiriya Oil Field

Rigzone reports that the Iraqi oil ministry is planning to auction the giant ‘Nasiriya Integrated Project’ — which involves the development of a $4.4-billion oil field and the building of a 300,000 bpd refinery in southern Iraq — on 19th December.

At a workshop in Amman, Jordan, for international companies interested in the billion-dollar project, Abdul Mahdy al-Ameedi, head of the Petroleum Contracts and Licensing Directorate (PCLD) said a total of 52 international oil companies would be able to take part in the bidding round; those are the 45 firms already qualified from previous bidding rounds, plus the seven companies shortlisted last month.

Ameedi added that the ministry is also processing documents from a further five companies: Daelim; Essar; GS E&C; Pak-Arab Refining; and Maurel et Prom.

Mr. Ameedi briefed the companies on a preliminary draft contract prepared by the PCLD. According to the draft, terms will be different from the technical service contract awarded to companies during previous bidding rounds for oil and gas fields. The changes include amendments to investor costs and a pay-per-barrel remuneration fee.

Unlike the previous contract, the new one will offer investors a share in project revenues, but only when production begins. The ministry will pay recovery costs from the date of commencement of work, which differs from the previous contract where the costs were only paid when the contractor raised production by 10%.

According to Rigzone, investors would have to pay some 35% taxes on the profit they made from Nassiriya project, the same amount as in previous deals.

Oil firms have complained that the terms of ministry’s previous contracts were tough and fell short of their expectations. They prefer production sharing contracts rather than the technical service deals that Baghdad previously signed with many of them.

Mr. Ameedi said Total was allowed to invest in the Nassiriya refinery but it wouldn’t be allowed to work in the field unless it cancels its projects in Kurdistan. If Total and its partners win the Nassiriya project, it will be allowed to operate the refinery but not the field, he added.

Iraq’s three aging refineries, Baiji [Beiji, Bayji], Doura [Daura] and Basra, are producing 560,000 bpd, or 70 percent of capacity, which is enough to meet 60- to 70 percent of Iraq’s total needs.